GBP/USD Maintains Average Recovery Gains, No Follow-up After 1.3100 Benchmarks
Little Consolidation for the Buck
The currency pair of the Great British Pound and the US Dollar dropped off a few points from its daily high points in the course of the European session as it opened on Thursday. The pair traded with an average gain on intraday close to 1.3080 to 1.385 areas.
There was a measure of positive traction that went the way of the GBP/USD currency pair in the first half of trading on Thursday and it swiftly moved off from the low point of three weeks where it had languished at a point. That was in the vicinity of the 1.3045 zones it touched on Tuesday.
GBP/USD price chart. Source TradingView
The following increase, however, did not possess sufficient bullish conviction, neither did it get any form of acceptance over the 1.3100 figure benchmarks in the midst of the new sets of purchases that emerged around the US dollar, which was further boosted by the hawkish monetary policy position of the United States Federal Reserve.
FOMC Minute Giving Insights
In the barrage of several events, the minutes from the meeting of the Federal Open Market Committee which was held on the 15th and 16th of March has been published on Wednesday. The published meeting minute revealed that policymakers at the US Federal Reserve were absolutely ready to increase interest rates by 50 basis points in their next meeting coming up in May; more so, the market has fully priced in another bet that the Federal Reserve will increase the rates by another 50 basis points at the next monetary policy meeting after May.
The latest realization about inflation on the part of the Federal Reserve is that it has broadened its base throughout the US economy. This gave more impetus for the 50basis point increase for the immediate term in May.
The published minute equally revealed that there is a general acknowledgement that the central bank has to reduce its balance sheet massively such that there is just an upper limit pace of $95 billion on a monthly basis to effectively tighten the financial conditions.
As the hope for a quick diplomatic resolution to the conflict in Eastern Europe becomes sketchy and the US Federal Reserve is planning more aggressive moves, these two major events are applying a lot of pressure on risk sentiments across the world. The weakness that recently attended stock markets give evident to this fact and it brought some safe-haven funds in the way of the buck to put a lid on significant upsides where the GBP/USD pair is concerned.